In Part 3 we investigated the maths behind excess concessional contributions tax. Bill’s example showed that, after undergoing this somewhat convoluted exercise culminating in a release of 85% of the excess contributions, he hasn’t achieved any advantage so why is this action being considered by some as a deliberate SMSF strategy? If the 15% contribution tax could...
When I received the news that I had been admitted into the newly minted designation of Fellow of the SMSF Association it gave me cause to reflect on the sector - on how much has changed and how much has stayed the same. In 1994 there were 70k funds holding $12b in assets. The fund managers offering...
In this Part 3 we investigate the maths behind excess concessional contributions tax. The 3 parts lay the foundation for a consideration of the making of excess concessional contributions as a financial planning strategy. This will be dealt with in Part 4 where the example below will be revisited. Bill earns $225k. He’s already contributing $25k to...
Excess concessional contributions are subject to a maximum of 32% (including medicare levy) in extra tax. This is not a flat rate of tax. It can be less as it’s paid by the member personally, not the super fund, and calculated by adding the excessive amount to the member’s declared income in the year of contribution....
Members need to be aware that the concessional contributions they believe they have made via their pay slips will often not match what has been contributed to their superannuation fund. This is because the fund will not receive the last quarter’s contribution until July. This timing factor can easily result in an inadvertent breach of the...
The ATO are now issuing alerts directly to trustees via email and/or text messages when any changes are made within their SMSF. This includes changes to: financial institution account details electronic service address (ESA) authorised contact or members. The purpose of the measure is to prevent fraud and mismanagement and works in conjunction with similar notifications from...
Valuations on properties affected by the bushfires will directly affect some SMSFs now. Pre-fire valuations will be used for the 2019 financials so will still be a determinant for each member’s 2019 total super balance. They will also contribute to closing pension balances which will determine the minimum level of pension that must be drawn for the...
Catastrophic bush fires continue to cause unimaginable loss and damage. In their aftermath, the loss of regular income from employment and businesses will cause ongoing financial stress to many who may well be asking if they can access their superannuation. Others may wonder if they may access their superannuation to assist those in need. SMSF members, as...
Recent press has drawn attention to the risk of inadvertently converting a member balance to unrestricted non-preserved. This effects both the total super balance treatment of certain SMSF limited recourse borrowings and also to members’ transfer balance accounts arising from the transfer of transition to retirement pensions to retirement phase pensions, potentially breaching the transfer balance...
SMSF trustees cannot claim travel expenses relating to residential investment property. This restriction has been in place since 1 July 2018 but is still not widely known. Removing this deduction reduces the potential of it being used as an early release mechanism whereby the SMSF is used to fund an annual trustee holiday to some exotic...